Wholesalers: minimum unit pricing of alcohol and trade sales consultation

Summary

Minimum Unit Pricing was introduced on 1 ^st May 2018. The relevant legislation is the Alcohol (Minimum Pricing) (Scotland) Act 2012 which makes Minimum Unit Pricing a mandatory condition of a premises and occasional licence. This means that, in order to comply with a premises and occasional licence, alcohol cannot be sold on those premises below the Minimum Unit Price. The Alcohol (Minimum Price per Unit) (Scotland) Order 2018 came into force on 1 ^st May 2018 and set the minimum price at 50 pence per unit of alcohol.

Prior to the implementation of Minimum Unit Pricing, the Scottish Government held discussions with various representatives in the alcohol industry on the process of implementation. During some of these discussions a very specific issue relating to wholesalers and the operation of the Licensing (Scotland) Act 2005 came to light. It was also raised at the Cabinet Secretary for Health and Sport’s appearance at the Health and Sport Committee on 17 ^th April 2018 ^[1] in connection with the scrutiny of the Order proposing to set the minimum price at 50 pence per unit.

The issue which has arisen is that there are differing views within the licensing community on whether a wholesaler with a premises licence should apply Minimum Unit Pricing to trade sales or whether trade sales from those licensed premises are exempt from Minimum Unit Pricing.

The Scottish Government considers a legislative change is required to clarify the position for certain wholesalers as regards compliance with Minimum Unit Pricing.

This paper provides some background for people who wish to take part in the consultation.

Who will be affected?

Wholesalers holding a premises licence and making both sales to trade and sales to the public will be affected.

Wholesalers selling to the public (as well as to trade) require a premises licence. All sales to the public must comply with all mandatory licensing conditions, including Minimum Unit Pricing.

Wholesalers selling alcohol to trade only are not required to hold a premises licence and so Minimum Unit Pricing does not apply.

Sales to trade means the selling of alcohol to trade to a person for the purposes of the person’s trade ^[2] .

What is the issue?

It has become apparent that there are differing views held within the licensing community on the application of the new mandatory condition of Minimum Unit Pricing to premises licences as regards wholesalers and trade sales.

Essentially, the differing views focus on, in those circumstances where a licence is held by a wholesaler, whether trade sales from those licensed premises should be subject to Minimum Unit Pricing, or whether they are exempt from Minimum Unit Pricing.

There is no intention, and there never has been any intention, by the Scottish Government that Minimum Unit Pricing would apply to trade sales. The policy is that only sales of alcohol which are not trade sales should be subject to the minimum price. Minimum Unit Pricing has been introduced by the Scottish Government to reduce the level of alcohol-related harm we experience in Scotland. There is lots of evidence to show that, as alcohol becomes more affordable, drinking increases, and as drinking increases so does harm. Affordability is directly relevant to the consumer and this is why Minimum Unit Pricing is applied to the retail price of alcohol.

Why are the Scottish Government introducing this?

The Scottish Government considers that a legislative change is required in order to clarify the situation for wholesalers holding a premises licence. This would be achieved by bringing forward an affirmative Scottish Statutory Instrument.

The clarification to be achieved by the Scottish Statutory Instrument is to make clear that the minimum price per unit does not apply for the purposes of sales to trade.

This consultation is issued to satisfy the terms of regulation 9 of EU Regulation No. 178/2002. This is a rule of EU law which requires that there should be open and transparent public consultation where food law (like the policy in connection to Minimum Unit Pricing) is being prepared or changed.

The Scottish Wholesale Association has provided guidance for wholesalers on how to apply Minimum Unit Pricing, and a link to this guidance is on the Scottish Government website ( Guidance for wholesalers). The Scottish Statutory Instrument being consulted upon is consistent with this guidance. In particular, to note that where a wholesaler holds a licence and sells alcohol to both the trade and the public, and where the price of alcoholic products may differ due to Minimum Unit Pricing being applied, the wholesaler will need to operate a dual pricing system.